Frequently Asked Questions

All retirees collecting a benefit from our system, who live in Massachusetts, are not required to pay state income tax on their allowance.  If you live outside of Massachusetts, you may be required to pay income tax in the state where you live.  You may wish to review this link which provides information on how each state taxes retirement benefits.

Most retirees will have to pay Federal income tax on their allowance.  Each January, we will send all retirees a 1099R form showing the total amount paid to you, the total amount of taxable income, and the total amount of Federal income tax already withheld.  You will need this information in order to complete your tax return each year, so please let us know if you do not receive your form by the second week of February.

All retirees who paid into this system prior to January 1988 will have a small tax offset to reflect amounts withheld from their paycheck on a post-tax basis.  This will be shown in box 5 of the 1099R form.

Not all benefits are fully taxable by the Federal government.  Certain types of payments, such as Accidental Disability benefits and some survivor benefits may be partially or completely exempt from taxation.  Please call our office if you have any questions about the type of benefit you are receiving and how much of your benefit is taxable.

Members of the Cambridge Retirement System (CRS) who terminate their employment are eligible to apply for a refund of their accounts.  You are not eligible to withdraw any portion of your funds if you are actively employed by any unit of the CRB, or on an authorized leave of absence, or collecting Workers’ Compensation benefits.  Also, if you are a member of another Massachusetts retirement system due to employment with another city or town, or with the Commonwealth, your funds must be transferred to your new retirement system.

If you are eligible to withdraw your funds, keep in mind that you have two options for receiving the money.  You may choose to take the balance in a refund directly to you, or you may choose to make a direct rollover to another eligible retirement plan.

If you choose to take the money yourself, the CRB will withhold 20% of the balance as a Federal tax withholding.  This portion is sent directly to the IRS.  This portion may not represent your entire tax liability for the payment and if you are under age 59 ½ at the time that you receive your refund, you may be subject to additional penalties.  For more information, you may review the Special Tax Notice Regarding Plan Payments, available by clicking here, or consult with a tax professional.  Refunds are not currently subject to Massachusetts state income tax.

If you choose to roll over your funds, your refund will not be subject to any tax withholding.  Federal law allows the CRB to move funds directly to a traditional IRA, a 403(b) plan or a 457 governmental deferred compensation plan.  We are not able to make direct rollovers to 401(k) plans or Roth IRAs.

Applicants should be aware of significant changes to the pension laws, effective for members who join the system after April 2, 2012.  Members who joined the system prior to this date are not affected by the change.  However, by withdrawing your funds from the retirement system, you are ending your membership in the system.  Should you later return to public employment, you would be treated as a new member, and subject to the new provisions in the law.

The major provisions of the law are:

  • Increase in the minimum retirement age from 55 to 60.
  • Retirement calculations to be based on the average of 5 years of earnings, rather than 3 years of earnings.
  • New age factors to be used in calculating an allowance.  For most members, these factors will result in a requirement to work until age 67, rather than 65, in order to reach maximum benefits.
  • Requirement that any make-up or redeposit paid into the system must be completed within one year, or be subject to a higher interest rate.
  • The elimination of Termination Allowances.

There are additional provisions affecting employees classified in Group 2 and Group 4, as well as elected officials.  If you are concerned about these aspects of the law, please contact a retirement staff member for details.

Members who leave their funds in the retirement system are entitled to preserve their old membership date, and would not be affected by the changes listed above.

The Retirement Board staff is happy to assist you in reviewing your options.  If you have any questions or concerns, please feel free to contact us.
Please click here to download the Application for Withdrawal of Accumulated Total Deductions.

When filling out your form, you only need to complete Section A on pages 1 – 3.

If you submit your form in person at our office, bring a photo ID.  If you submit your form by mail, have your signature notarized.  We cannot accept forms submitted by fax or email.

If you request a rollover, have your financial institution submit their own “letter of acceptance,” in addition to the CRB’s refund application.

After receipt of your completed application, refund checks will be issued within 30 to 90 days.

We are required to issue 1099-R tax statements in January of the year following your withdrawal.  Accordingly, if your address changes, please let us know, so we can insure that you receive your form.

Contact the retirement office to set up an appointment.

When using direct deposit, your monthly retirement allowance, will be available in your account on the last business day of each month. As of June 26, 2013 all new retirees are required to have direct deposit.

The Retirement Board will send your 1099R and any other information to your Florida address. You need to inform the retirement office by December 1 of each year of your address change.

Yes, please let the Retirement Board know of all life changes in writing.

Please notify the Retirement Board in writing and provide a voided check or letter from the bank identifying your account checking/savings and the bank routing number. Please keep in mind that the month you make a change to your direct deposit information your check will be mailed to you.

Only the retiree can make changes unless there is a guardian or power of attorney.

If your Option C beneficiary pre-deceases you your retirement allowance will pop-up to Option A.

Yes, your account will continue to accrue interest for two years.

The most anyone can collect as an annual retirement allowance is approximately 80%.

Yes, the funds are fully invested by professional money managers based on the rules and regulations set by legislation.

This is a mandatory deduction because you do not pay into Social Security.